Down and out in the USA isn’t what it used to be

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The politics of ethnicity-based research in New Zealand

When Simon Chapple in 2000 wrote “Māori Socio-Economic Disparity”, which showed that disadvantage in New Zealand is more closely tied to age, marital status, education, skills, and geographic location than it is to ethnicity, broadly conceived, such as Māori ethnicity:

  • He was summoned before the Māori Affairs Committee of parliament to defend his paper! His chief executive at the Ministry of Social Policy went along with him to defend what he wrote while employed as a senior analyst at the Department of Labour. Staff at his new ministry launched a petition to have Simon fired.
  • The head of the Māori Affairs Ministry accused Simon of breaching the public service code of conduct.

Chapple also found that there are important differences in socio economic development by Māori self-identity. Those who identified only as Māori did worse than those that are identified as Māori and another ethnicity. Identifying only as Māori also correlated with living in rural New Zealand.

In terms of employment discrimination, employers would not know whether a Māori job applicant identified as only as Māori or also with another ethnicity, so discrimination is not a good explanation of Māori disadvantage because of this counterfactual. A major driver of Māori disadvantage, which is identifying on the Census form solely as Maori, is simply unknown to discriminating employers as a basis for discrimination in hiring and promotion.

There were editorials in the Dominion Post, which I cannot find online,  and in the New Zealand Herald. The latter said:

The Government is being prodded to recognise that Maori deprivation has more to do with socio-economic factors than ethnicity.

This was the conclusion of a report by the Labour Department’s senior research analyst, Simon Chapple. Helen Clark might well have had that finding partly in mind when she referred to a lot of water having gone under the bridge since the Government first formulated legislation.

Mr Chapple said, in essence, that place of residence, age, education and skills had more to do with poverty than race. In areas such as South Auckland, Northland and the central North Island, there were poor Maori, but there were also poor Pākehā and poor Pasifika.

The Minister attacked him and the paper as well for contradicting the Minister’s claim during the election campaign that everything got worse for Maori in the 1990s.

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Real equivalised median household income rose 47% from 1994 to 2010; for Māori, this rise was 68%; for Pasifika, 77% (Perry July 2014)

See Karen Baehler’s Ethnicity-based research and politics: snapshots from the United States and New Zealand for more information and a comparison with the similar response to Daniel Patrick Moynihan’s The Negro Family: A Case for National Action in 1965.

About a quarter of Negro families are headed by women. The divorce rate is about 2 1/2 times what it is [compared with whites],” Moynihan said. “The number of fatherless children keeps growing. And all these things keep getting worse, not better, over recent years.”

Moynihan, now retired from the United States Senate, was a senior official in LBJ’s Labor Department in 1965. He wrote his report on a typewriter over a few weeks and had the publications office in the basement of the Labor Department print 100 of them, marked “For Official Use Only.”

  • He warned about the breakdown of the African-American family where deprivation and disorganisation had formed their own vicious circle.
  • Many civil rights leaders had labelled Moynihan’s report a subtle form of racism because of its unflattering portrayal of the black family (Wilson 1987).
  • These accusations of racism helped make the breakdown of the family a taboo subject in social policy in the USA

see The Moynihan Report Revisited: Lessons and Reflections after Four Decades for a review by the best and the brightest in American economics and sociology on Daniel Patrick Moynihan’s prophetic warnings. Holzer says, for  example:

Moynihan was extremely insightful and even prescient in arguing that the employment situation of young black men was a “crisis . . . that would only grow worse.”

He understood that these trends involve both limits on labour market opportunities that these young men face as well as skill deficits of and behavioural responses by the young men themselves.

More children are growing-up without a working father living in the home and glean the awareness that work is a central expectation of adult life (Wilson 1987, 1996).

Single-parent households increased from 13 per cent of all Māori households in 1981 to 24.4 per cent in the 2006 Census. In the 2006 Census, 70 per cent of Māori single parent households were on a low income compared to 15 per cent of other Māori one family households (Kiro, Randow and Sporle 2010).

Most of the skill gaps that are present at the age of 18 – skill gaps which substantially explain gaps in adult earnings and employment in all groups – are also present at the age of five (Cunha and Heckman 2007). There is much evidence to show that disadvantaged children have lower levels of soft skills (non-cognitive skills): motivation, persistence, self-discipline, the ability to work with others, the ability to defer gratification and plan ahead, etc. (Heckman 2008). Most of the skills that are acquired at school build on these soft skills that are moulded and reinforced within whānau.

When I started working on labour economics in 2007 I found that the labour economics of Māori was very narrowly written and stayed well clear of the minefield that Simon braved about how ethnicity does not matter that much to Māori social disadvantage.

The invisible hand

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.  - Adam Smith

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Does socialism deserve another chance?

…very many normal people of leftish views, even after communism, even after numerous disastrous experiments in central planning, even after trying to get a train ride from Amtrak or service from the Postal Service (not to mention service from the Internal Revenue Service or from the Immigration and Naturalization Service; you see I wax indignant: I am, after all, a free-market economist), think Socialism Deserves a Chance.

They think it obvious that socialism is after all fairer than unfettered capitalism. They think it obvious that regulation is after all necessary to restrain monopoly.

They don’t realize that free markets have partially broken down inequality (for example, between men and women; “partially,” I said) and partially undermined monopolies (for example, local monopolies in retailing) and have increased the income of the poor over two centuries by a factor of 18.

Deirdre McCloskey

The Hockey Stick of Human Prosperity

On a timeline of human history, the standard of living resembles a hockey stick – flatlining and then skyrocketing in just the last few centuries.

Specialization and trade explains the astonishing growth of productivity and output in such a short amount of time—after millennia of famine, low life expectancy, and incurable disease

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Household Incomes in NZ: trends in indicators of inequality and hardship 1982-2013

Real household income trends, 1982 to 2013 ($2013) before housing costs (BHC) and after housing costs (AHC)

real household income 1982-2013

Gini coefficient 1980 – 2015

gini coefficient 1980 2015

The tax and transfer system significantly reduces the inequality

The tax and transfer system significantly reduces the inequality

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the increases were 55% for Pakeha, 57% for Pasifika, and 64% for Māori since 1994.

Richard Posner on Bill Gates as a development economist

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Here’s a little test

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Would You Give Up The Internet For Life For 1 Million Dollars?

from Would You Give Up The Internet For 1 Million Dollars? – YouTube via Luke Froeb.

The Great Enrichment foretold

Thomas Babington Macaulay’s books on British history are hailed as literary masterpieces.

His writing are famous for their emphasis on a progressive model of British history, according to which the country threw off superstition, autocracy and confusion to create a balanced constitution and a forward-looking culture combined with freedom of belief and expression.

This model of human progress has been called the Whig interpretation of history where civilisation marches onwards and upwards towards the light. I do know how he explained the fall of the Roman Empire and the Dark Ages.

On the nature and causes of the Wealth of Nations

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The meaning of economic development

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Alchian and Allen on the irrelevance of economists and economic principles to progress

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What the experiments of the 20th century told me

It would have been hard to know the wisdom of Friedrich Hayek or Milton Friedman or Matt Ridley or Deirdre McCloskey in August of 1914, before the experiments in large government were well begun.

But anyone who after the 20th century still thinks that thoroughgoing socialism, nationalism, imperialism, mobilization, central planning, regulation, zoning, price controls, tax policy, labour unions, business cartels, government spending, intrusive policing, adventurism in foreign policy, faith in entangling religion and politics, or most of the other thoroughgoing 19th-century proposals for governmental action are still neat, harmless ideas for improving our lives is not paying attention.

Deirdre McCloskey

P.T. Bauer on development aid as a precondition to development in the Third World

Foreign aid is clearly not a neces­sary condition of economic devel­opment. This fact is obvious from the history of the developed coun­tries, all of which began poor and have invariably progressed with­out government-to-government aid.

It is clear also from the his­tory of many underdeveloped coun­tries — Hong Kong, Japan, Malaya — which have advanced in recent decades without foreign aid.

P.T. Bauer (1966)

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